Bushansky v. Ramaswami et al
Case Summary
On May 5, 2023, Stephen Bushansky (“Plaintiff”), represented by Joel E. Elkins of Weiss Law, filed a contract lawsuit against Nutanix, Inc. (“Nutanix” or the “Company”), Rajiv Ramaswami, Craig Conway, Max De Groen, Virginia Gambale, Steven Gomo, David Humphrey, Gayle Sheppard, and Brian Stevens (collectively, “Defendants”), seeking declaratory relief for alleged breach of fiduciary duties by the defendants in violation of the Exchange Act. This case was filed in the U.S. District Court for the Northern District of California, with Judge Virginia K. DeMarchi presiding.
In the complaint, the plaintiff alleged, “This is a stockholder derivative action brought against the Nutanix Board for their violations of fiduciary duties and other misconduct, which resulted in substantial damage to the Company and its stockholders.”
Plaintiff also alleged, “Nutanix offers a comprehensive cloud platform to its customers including access to numerous third-party software applications which work in conjunction with Nutanix’s platform. The flexibility of Nutanix’s platform and freedom of choice is critical as an advantage in a highly competitive market. The Individual Defendants acknowledged their awareness of the material risks facing the Company in connection with its business model and, as such, knew of the necessity of implementing and maintaining internal controls to oversee and monitor those risks.”
The plaintiff further alleged, “Throughout 2021, in public filings and conference calls with financial analysts, the Company repeatedly touted its ‘diligent expense management’ and continued investment in partnerships with third-party vendors as one of the keys to its success. However, in March 2023, the Company disclosed a weakness in its internal controls which led to the use of third-party software that was only on its platform for ‘evaluation purposes’ to be used for more purposes than that which was contracted. Consequently, the Company owed the third-party software vendor additional fees, giving the lie to previous representations regarding ‘diligent expense management.’ The material weakness in internal controls resulted in the Company’s inability to timely file its Quarterly Report for the second quarter of 2023.”
Additionally, the plaintiff alleged, “Following a nearly 8% drop in the Company’s stop price as a result of the weakness in the internal controls, a securities class action was filed against the Company, Defendant Rajiv Ramaswami (‘Ramaswami’), President and Chief Executive Officer (‘CEO’) of Nutanix, and the former and current Chief Financial Officers. As such, the Company is now subject to substantial liability and will be forced to expend substantial sums to defend itself, as well as its directors and officers.”
The plaintiff alleged, “As a result of the Individual Defendants’ breaches of fiduciary duty and other misconduct, Nutanix has sustained substantial damages and irreparable injury to its reputation. Through this action, Plaintiff seeks to recover for the Company its damages and remediate the internal control weaknesses that afflict Nutanix. Plaintiff did not make a demand prior to bringing this action because it would be futile. The Company’s directors are neither disinterested nor independent. In the absence of this action, Nutanix will neither recover its damages nor properly remediate the weaknesses in its internal controls and corporate governance practices and procedures.”
Plaintiff presented four claims for relief, including for alleged violations of Section 14(a) of the Exchange Act, breach of fiduciary duties, and contribution for violations of Section 21D of the Exchange Act for aiding and abetting.
In the prayer for relief, the plaintiff requested a judgment for declaratory relief. The plaintiff also requested an award for damages with costs and disbursements, including reasonable attorneys’ fees, experts’ fees, and expenses incurred.
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Case Details
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Case Number:
3:23-CV-02203
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Filing Date:
05/05/2023
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Case Status:
Pending - Other Pending
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Case Type:
Contract - Security
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Court:
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Courthouse:
Judge Details
Presiding Judge
William H. Orrick
Party Details
Plaintiff
Stephen Bushansky
Defendants
Rajiv Ramaswami
Craig Conway
Max de Groen
Virginia Gambale
Steven Gomo
David Humphrey
Gayle Sheppard
Brian Stevens
Nutanix, Inc.
Attorney/Law Firm Details
Plaintiff Attorney
Joel E. Elkins
Court Documents
(#1) COMPLAINT against Craig Conway, Virginia Gambale, Steven Gomo, David Humphrey, Nutanix, Inc., Rajiv Ramaswami, Gayle Sheppard, Brian Stevens, Max de Groen ( Filing fee $ 402, receipt number ACANDC-18238606.). Filed byStephen Bushansky. (Attachments: #1 Exhibit Verification, #2 Civil Cover Sheet Civil Cover Sheet)(Elkins, Joel) (Filed on 5/5/2023) (Entered: 05/05/2023)
Exhibit Verification
Civil Cover Sheet Civil Cover Sheet
(#2) Certificate of Interested Entities by Stephen Bushansky identifying Corporate Parent Nutanix, Inc., Other Affiliate Steven Gomo, Other Affiliate Stephen Bushansky, Other Affiliate Craig Conway, Other Affiliate Rajiv Ramaswami, Other Affiliate Weiss Law, Other Affiliate Max de Groen, Other Affiliate Virginia Gambale, Other Affiliate David Humphrey, Other Affiliate Gayle Sheppard, Other Affiliate Brian Stevens for Stephen Bushansky. (Elkins, Joel) (Filed on 5/5/2023) (Entered: 05/05/2023)
(#3) Proposed Summons. (Attachments: #1 Exhibit Defendants List for Issuance of Summons)(Elkins, Joel) (Filed on 5/5/2023) (Entered: 05/05/2023)
Exhibit Defendants List for Issuance of Summons
(#5) Initial Case Management Scheduling Order with ADR Deadlines: Case Management Statement due by 8/1/2023. Initial Case Management Conference set for 8/8/2023 01:30 PM in San Jose, Courtroom 2, 5th Floor. (cv, COURT STAFF) (Filed on 5/8/2023) (Entered: 05/08/2023)
(#6) Summons Issued as to Craig Conway, Virginia Gambale, Steven Gomo, David Humphrey, Nutanix, Inc., Rajiv Ramaswami, Gayle Sheppard, Brian Stevens, Max de Groen. (cv, COURT STAFF) (Filed on 5/8/2023) (Entered: 05/08/2023)
(#7) CONSENT/DECLINATION to Proceed Before a US Magistrate Judge by Stephen Bushansky.. (Elkins, Joel) (Filed on 5/16/2023) (Entered: 05/16/2023)
(#10) Case Reassigned to Judge William H. Orrick for all further proceedings. Notice: The assigned judge participates in the Cameras in the Courtroom Pilot Project. See General Order No. 65 and http://cand.uscourts.gov/cameras. Magistrate Judge Virginia J. DeMarchi no longer assigned to case. Reassignment Order signed by Clerk on 5/16/2023. (Attachments: #1 Notice of Eligibility for Video Recording) (bw, COURT STAFF) (Filed on 5/16/2023) (Entered: 05/16/2023)
Notice of Eligibility for Video Recording
(#11) CASE MANAGEMENT CONFERENCE ORDER - Case Management Conference set for 8/8/2023 02:00 PM via Videoconference. Case Management Statement due by 8/1/2023. Signed by Judge William H. Orrick on 05/18/2023. (jmd, COURT STAFF) (Filed on 5/18/2023) (Entered: 05/18/2023)
(#12) WAIVER OF SERVICE Returned Executed filed by Stephen Bushansky. Service waived by Craig Conway waiver sent on 5/17/2023, answer due 7/17/2023; Virginia Gambale waiver sent on 5/17/2023, answer due 7/17/2023; Steven Gomo waiver sent on 5/17/2023, answer due 7/17/2023; David Humphrey waiver sent on 5/17/2023, answer due 7/17/2023; Nutanix, Inc. waiver sent on 5/17/2023, answer due 7/17/2023; Rajiv Ramaswami waiver sent on 5/17/2023, answer due 7/17/2023; Gayle Sheppard waiver sent on 5/17/2023, answer due 7/17/2023; Brian Stevens waiver sent on 5/17/2023, answer due 7/17/2023; Max de Groen waiver sent on 5/17/2023, answer due 7/17/2023. (Elkins, Joel) (Filed on 5/18/2023) (Entered: 05/18/2023)
Docket Entries
Docket(#12) WAIVER OF SERVICE Returned Executed filed by Stephen Bushansky. Service waived by Craig Conway waiver sent on 5/17/2023, answer due 7/17/2023; Virginia Gambale waiver sent on 5/17/2023, answer due 7/17/2023; Steven Gomo waiver sent on 5/17/2023, answer due 7/17/2023; David Humphrey waiver sent on 5/17/2023, answer due 7/17/2023; Nutanix, Inc. waiver sent on 5/17/2023, answer due 7/17/2023; Rajiv Ramaswami waiver sent on 5/17/2023, answer due 7/17/2023; Gayle Sheppard waiver sent on 5/17/2023, answer due 7/17/2023; Brian Stevens waiver sent on 5/17/2023, answer due 7/17/2023; Max de Groen waiver sent on 5/17/2023, answer due 7/17/2023. (Elkins, Joel) (Filed on 5/18/2023) (Entered: 05/18/2023)
[-] Read LessDocket(#11) CASE MANAGEMENT CONFERENCE ORDER - Case Management Conference set for 8/8/2023 02:00 PM via Videoconference. Case Management Statement due by 8/1/2023. Signed by Judge William H. Orrick on 05/18/2023. (jmd, COURT STAFF) (Filed on 5/18/2023) (Entered: 05/18/2023)
[-] Read LessDocket(#10) Case Reassigned to Judge William H. Orrick for all further proceedings. Notice: The assigned judge participates in the Cameras in the Courtroom Pilot Project. See General Order No. 65 and http://cand.uscourts.gov/cameras. Magistrate Judge Virginia J. DeMarchi no longer assigned to case. Reassignment Order signed by Clerk on 5/16/2023. (Attachments: #1 Notice of Eligibility for Video Recording) (bw, COURT STAFF) (Filed on 5/16/2023) (Entered: 05/16/2023)
[-] Read LessDocket(#9) This case will be randomly reassigned to a District Judge outside the San Jose Division pursuant to the Caseload Rebalancing Pilot Program approved by the Court effective March 1, 2018. For information, visit our web page at #https://cand.uscourts.gov/notices/northern-district-extends-caseload-rebalancing-pilot-program/. (bw, COURT STAFF) (Filed on 5/16/2023) (Entered: 05/16/2023)
[-] Read LessDocket(#8) CLERK'S NOTICE OF IMPENDING REASSIGNMENT TO A U.S. DISTRICT COURT JUDGE: The Clerk of this Court will now randomly reassign this case to a District Judge because either (1) a party has not consented to the jurisdiction of a Magistrate Judge, or (2) time is of the essence in deciding a pending judicial action for which the necessary consents to Magistrate Judge jurisdiction have not been secured. You will be informed by separate notice of the district judge to whom this case is reassigned. ALL HEARING DATES PRESENTLY SCHEDULED BEFORE THE CURRENT MAGISTRATE JUDGE ARE VACATED AND SHOULD BE RE-NOTICED FOR HEARING BEFORE THE JUDGE TO WHOM THIS CASE IS REASSIGNED. This is a text only docket entry; there is no document associated with this notice. (amk, COURT STAFF) (Filed on 5/16/2023) (Entered: 05/16/2023)
[-] Read LessDocket(#7) CONSENT/DECLINATION to Proceed Before a US Magistrate Judge by Stephen Bushansky.. (Elkins, Joel) (Filed on 5/16/2023) (Entered: 05/16/2023)
[-] Read LessDocket(#6) Summons Issued as to Craig Conway, Virginia Gambale, Steven Gomo, David Humphrey, Nutanix, Inc., Rajiv Ramaswami, Gayle Sheppard, Brian Stevens, Max de Groen. (cv, COURT STAFF) (Filed on 5/8/2023) (Entered: 05/08/2023)
[-] Read LessDocket(#5) Initial Case Management Scheduling Order with ADR Deadlines: Case Management Statement due by 8/1/2023. Initial Case Management Conference set for 8/8/2023 01:30 PM in San Jose, Courtroom 2, 5th Floor. (cv, COURT STAFF) (Filed on 5/8/2023) (Entered: 05/08/2023)
[-] Read LessDocket(#4) Case assigned to Magistrate Judge Virginia K. DeMarchi. Counsel for plaintiff or the removing party is responsible for serving the Complaint or Notice of Removal, Summons and the assigned judge's standing orders and all other new case documents upon the opposing parties. For information, visit E-Filing A New Civil Case at http://cand.uscourts.gov/ecf/caseopening.Standing orders can be downloaded from the court's web page at www.cand.uscourts.gov/judges. Upon receipt, the summons will be issued and returned electronically. A scheduling order will be sent by Notice of Electronic Filing (NEF) within two business days. Consent/Declination due by 5/19/2023. (bw, COURT STAFF) (Filed on 5/5/2023) (Entered: 05/05/2023)
[-] Read LessDocket(#3) Proposed Summons. (Attachments: #1 Exhibit Defendants List for Issuance of Summons)(Elkins, Joel) (Filed on 5/5/2023) (Entered: 05/05/2023)
[-] Read LessDocket(#2) Certificate of Interested Entities by Stephen Bushansky identifying Corporate Parent Nutanix, Inc., Other Affiliate Steven Gomo, Other Affiliate Stephen Bushansky, Other Affiliate Craig Conway, Other Affiliate Rajiv Ramaswami, Other Affiliate Weiss Law, Other Affiliate Max de Groen, Other Affiliate Virginia Gambale, Other Affiliate David Humphrey, Other Affiliate Gayle Sheppard, Other Affiliate Brian Stevens for Stephen Bushansky. (Elkins, Joel) (Filed on 5/5/2023) (Entered: 05/05/2023)
[-] Read LessDocket(#1) COMPLAINT against Craig Conway, Virginia Gambale, Steven Gomo, David Humphrey, Nutanix, Inc., Rajiv Ramaswami, Gayle Sheppard, Brian Stevens, Max de Groen ( Filing fee $ 402, receipt number ACANDC-18238606.). Filed byStephen Bushansky. (Attachments: #1 Exhibit Verification, #2 Civil Cover Sheet Civil Cover Sheet)(Elkins, Joel) (Filed on 5/5/2023) (Entered: 05/05/2023)
[-] Read Less
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